Can I cancel my letting agents contract and keep my good tenant?

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Readers Question - How to cancel a letting agents Contract and keep tenantI’ve received an email from Sophie today who wants to cancel her letting agents contract but keep her good tenant. As we have so many professional letting agents reading this forum I’m hoping that we can give Sophie and several other landlords who find this article in an internet search some sound advice. Sophie’s email is below in italics.

Please post your response in the comments section below.

“Hi Mark

I am new to being landlord and engaged a local estate agent to help let my property.  The tenancy agreement is due to expire in the next 2 months and I really like the tenant I have got.

My questions are therefore:

          1, Is it possible to keep the tenant but lose the agent?

          2, If so, what steps do I need to do to ensure this take place?

Thanks in advance for the help.

Sophie”

What advice would you offer to Sophie?

My initial thoughts are:-

a) Read the agents contract, particularly any termination clauses

b) Consider why you want to terminate the contract if the agents have done a good job and sourced a good tenant

c) Are you likely to want to use this agent again?

d) Have you spoken to the agent to explain your situation?

Sophie – perhaps you could answer these questions too as this may alter the advice that readers offer. 

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Comments

  • Mark Trenfield says:

    HI Sophie,
    This is a great question and worthy of a blog in it’s own right to cover all the different aspects of your question and different answers and views ……

    The usual answer to this question (Sorry Mark A) is “check your agencies contract” …. but I think this goes deeper than the legal clauses in the agency contract (that may or may not stand up in Court as they probably would breach your Human Rights if they were too restrictive anyway) as there is a moral question, a practical question and there is also reality and fairness!

    Legally; the clauses in the letting agency contract will determine how termination between landlord and agent should be conducted. If you try and take your tenant away from the agent, without just cause (ie: you simply want to save yourself the agency fees) then they will threaten legal action …… I’ve even known landlords invent “just cause” to try and get out of their legal obligations …..

    Morally; you were very happy to use the agent when your property was empty (earning no rent) .. and the agent seems to have done a good job in finding you the “model tenant” … so is it morally right to deliberately breach contract with the agent. I don’t think it is morally right – but that hasn’t stopped my customers doing this very thing to me (and my business) in the past.

    Practically; It’s your property and you can do what you want with it and, ultimately, the Letting Agent will have to do as you say! BUT if you try and “dump the agent” then you need to make sure you don’t, accidentally, “dump the tenant” as well. The tenant might be happy dealing with the agent who is probably holding the tenant’s deposit money – they might be nervous dealing with the landlord direct.

    Reality; The Letting Agent is unlikely to sue you for breach of contract (as the worth of that contract is small – ie: a few hundred pounds a year in lost management fees) irrespective of what the legal contract says. Life is too short to fight morally corrupt landlords over a minimal fee – it is a business distraction. You can’t please all the people … all the time ….

    Fairness; The Letting Agent does a good job and finds you a good tenant and charges you the fees that you agreed at the start of the contract and is providing you with the letting service(s) that you asked them to provide.

    So … is it FAIR …. to take control of the tenancy thereby cutting out the letting agent’s fee … just to save a few hundred pounds in fees ……. I think most, reasonable people, would consider that to be UNFAIR …….. but then again …… not all Landlords are reasonable people.

    Finally; Good Letting Agents are as rare as “hens teeth” ….. and if you’ve found a good one … you should hang onto them …… I don’t think it matters what the legal contracts say …. I think it is about upholding the excellent partnership that has been created, in this case, between landlord and agent.

    Can you dump the agent? – almost certainly YES ….
    Should you dump the agent? emphatically – NO …..


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  • Human Rights does not apply unless it is a body corporate etc like a local authority or the Courts so no issues there.
    The clause in the contract will be as long as there is at least one of original tenants or licensees introduced to the property by the agent at any prior date. If they are good agents they will have a good (i.e. strong) clause to this effect.
    And trust me it will be enforceable and trust me they’ll have deeper pockets than you Sophie.
    Normally if an agent has had time to recoup costs and make their money out of the Landlord they will be more sanguine on it – but not in the short term.
    Your best bet is the OFT as they do not like open ended commitment clauses. Hence you’ll probably find instead (or as well) a ‘buy out’ option where youy can pay probably 6 months fees of say £500 to buy yourself out of the contract.
    Be weary of any advice saying agents will not pursue you – believe me they will especially if they see no good reason for you to dump them so early.
    Your best bet is a minute examination of the contract and threatened referral to OFT and possibly TPO if it breaches their Code of Conduct


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  • Agreed that Human Rights don’t come into this. Unfair contracts do though and possibly restrictive trade practices too. Until Sophie answers the questions raised towards the end of the article and explained in more detail why she wants to terminate it’s probably wrong of us to make assumptions as to who might be right or wrong in this instance. I don’t think it’s right to say whether agents will or will not choose to litigate, that’s a commercial decision that each letting agent will take on a case by case basis – there is no one size fits all approach. I tend to agree with @MarkTrenfield though that most agents will not litigate for the sake of a few hundred pounds as it’s often more trouble than it’s worth and even a win can result in negative publicity which can cause more damage to reputation than the amount of funds recovered.


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  • Amanda says:

    Hi Sophie,
    As Mark says you need to look at the agreement that you have signed with the letting agency. I know a number of landlords that have left their letting agents and carried on the tenancy themselves. It has cost them though, last one had to pay £350 and give the required notice to end the agreement.
    You do have to transfer the deposit and get copies of the last GSC and EPC. Hopefully the letting agent will be amicable and also give you the entry inventory as the condition of the property will have changed since the tenancy started. You do have a legal right to have all the details of the current tenant who is in the property and the letting agent has to supply these if you request them.
    My advice would be to 1. check your agreement. 2 Give notice 3. Read up on being a private landlord and what it entails. It is straight forward you just need to ensure that you have your back covered.
    Good luck, hope it all works out
    Amanda


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  • Paul Barrett Member Profile Deleted says:

    Surely the only honourable thing to do is comply with any terms of any agreement that you have willingly entered into.
    You would expect a tenant to comply with their AST conditions.
    Why should a LL think they can terminate a contract without penalty!!
    Only in the case of absolute incompetence, etc from a LA would you be justified in breaking a contract.
    You would presumably then sue the LA for breach of contract in failing to deliver the services that you pay fees for.
    So you should just grin and bear it and wait for the earliest notice period and then conclude your contract with the LA.


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  • 刘 丹 says:

    Hi I am Sophie:
    Thank you for all the advices, I have read the termination clauses which say I can keep the tenant, but I have to pay an introduction fee. I am waiting for an answer from the letting agents to let me know how much the introduction fee would be. I don’t want to dump the agent, just feel they charge too much and it is not justifiable for the work they have done


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  • Sophie in future I think you should use a Letting Agent but make it clear you would just like them to find a tenant and you will manage the property. I do this with all my property’s, as long as you agree the fee’s and you are happy with their service. I know first hand why you want away from the agent because I had it when new to the game, for 5 years I paid £400+ every 6 months to get a tenants agreement signed. What a waste of money! And before any one says they will have done more than that…..really they didn’t and when the penny’s are tight that is most of your profit!


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  • As Mark says, much depends on whether the agent has provided the service they should have. We sacked an agent after they gave us very poor service: taking on average about 3 weeks to pass on the rent, doing a grand total of one inspection over a 2.5-year tenancy and none at all over a 19-month one, failing to produce an inventory, failing to provide us with copies of tenancy agreements, tenants’ details, deposit protection info and inventories, despite repeated requests… and, as we subsequently found out, failing to protect the deposits until after we’d written to them to formally end our contract! The contract only required us to give 2 months’ written notice to end the contract so we did this, explaining why we were dissatisfied with their service, and kept the tenants on. In fact we almost had to take them to court before we managed to get the information relelvant to the tenancies from them (we prepared all the paperwork and sent them a copy along with the pre-action letter, and on the deadline date someone turned up at the door and handed over the files).

    If your experience has been anything like this bad then your agent is the one in breach of contract and you have every right to end the contract without paying them an introducer’s fee in addition to all the fees they’ve already had from you. On the other hand, if they’ve met all their obligations and you just resent paying the fees that you’ve agreed to then you need to pay whatever exit penalties are due if you want to end the contract.


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  • Mike Barnes says:

    Lettings agents are not just charging for what they have done, they are also charging for what they might have to do.
    How do you feel about getting a call about a problem at 8:00 Christmas eve when you have had a couple of drinks so cannot drive yourself to sort out problems? It’s happened to me!
    I manage my own lettings, including tenant selection, because the cost of using a letting agent would have consumed my profit margin when I started and interest rates were much higher than now.
    If i could find someone to field the emergencies for a reasonable fee, then I would go for it, just to ensure I keep my holidays for the family, but the rest of it has become much easier over the years, so not worth paying for someone else to do the work.


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  • Mark says:

    Whether she can or can’t it’s not worth it. Other agents will soon find out and even if they don’t she should consider the impact on her reputation and self esteem abusing other proffessionals talent and hard work. There are other layers to this issue other than short term immediate financial gain. Next time she goes into any deal she will carry over this attitude/behaviour/reputation. Finally there’s enough money to be made in this world with honesty and integrity without losing your soul.


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